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solve problem involving simple and compound interest. Simple Compound Interests What ig it m of Terms: # Lender or creditor - person (or institution) who invests the money or makes the funds available * Borrower or debtor - person (or institution) who owes the money or avails of the funds from the lender * Origin or loan date - date on which money is received by the borrower Time or term (t) - amount of time in years the money is borrowed or invested; length of time between the origin and maturity dates * Principal (P) - amount of money borrowed or invested on the origin date Rate (rj - annual rate, usually in percent, charged by the lender, or rate of increase of the investment Interest (I) - amount paid or earned for the use of money * Simple Interest (Is) - interest that is computed on the principal and then added to it * Compound Interest (Ic) - interest is computed on the principal and alao on the accumulated past interests Simple Interest: I= Prt Where, [=interest P= principal r= interest rate t=time Compound Interest: A=P(l+ =) Where, A= amount (future value) P= principal r= rate t= time = number of compounding per year: c= (annually) c = 2 (semi-annually) ce = 4 (quarterly) ce = 12 (monthly) c = 365 (daily) Simple Interest vs. Compound Interest Ca If you're a borrower who doesn't want to get stuck with expensive debt that takes years to eliminate, you'll probably want a loan with interest that doesn't compound, But if you're an investor looking to earn lots of money that you can use in retirement, it's best to search for an account with interest that compounds frequently, # Compound interest is greater than simple interest; Compound interest is greater than simple interest, The reason is very simple, Under simple interest system, the interest is computed only on principal amount whereas under compound interest system, the interest is computed on principle as well as on accumulated interest. What's More Directions: Read carefully each situation, Then, answer the question in each number and support your answer. 1, Miss Jennelyn avails a cash loan from her friend for her son's tuition fee, Her friend let her choose what interest will be used on her borrowed money it's either simple or compound interest. If you were Ms, Jennelyn, what would you choose? Why? 2, Miss Joy has P150,000,00 which she plans to put an investment for 3 years, She is choosing between simple and compound interest to be used, If you were Ms, Joy, what would you choose = simple or compound interest? Why